ITALY: Finance Minister Vittorio Grilli defends Bank of Italy's vigilance over troubled Monte dei Paschi bank

Record ID: 417815

  • Title: ITALY: Finance Minister Vittorio Grilli defends Bank of Italy's vigilance over troubled Monte dei Paschi bank
  • Date: 29th January 2013
  • Summary: ROME, ITALY (RECENT) (REUTERS) VARIOUS OF THE ITALIAN PARLIAMENT EXTERIOR
  • Embargoed: 13th February 2013 12:00
  • Keywords:
  • Location: Italy
  • Country: Italy
  • Topics: Politics
  • Reuters ID: LVA7PL48EF74MGHS4TT1UD3G72U7
  • Story Text: Italy's outgoing finance minister Vittorio Grilli on Tuesday (January 29) defended Mario Draghi over his handling of a troubled bank while he was head of the the Bank of Italy.
    Grilli told a parliamentary committee that the Bank of Italy started monitoring activity at Italy's third largest bank, Monte dei Paschi, in 2010, and that oversight intensified over the following years.
    An inspection in 2010 identified liquidity problems and overexposure of the Tuscan bank, Grilli said during testimony to parliament. Another inspection a year later showed the bank had not overcome its problems, he said.

    "The Monte dei Paschi di Siena bank was subjected to intense oversight that has allowed it to identify and to interrupt abnormal and risky behaviours, pushing the bank to strengthen its organisational and monitoring structures," he said.
    Grilli cautioned people not to damage the reputation of Italy's finance sector.

    "I think everybody needs to be cautious and responsible in the public debate over the state of our financial institutions in general, but in particular on today's problem, which is that of the Monte di Paschi bank. International worries about our country, even if they have notably decreased, are still present, and the rest of Europe as well as the rest of the world, when analysing our situation, has always considered the stability of our banking and financial system one of our strong points," he said.
    Monte dei Paschi revealed last week that it had suffered nearly 1 billion U.S. dollars of losses in complex derivatives deals entered to massage its accounts because of severe financing problems.
    The chairman of Monte di Paschi, Giuseppe Mussari, resigned from the bank last year.
    Known as "Daddy Monte" because of its huge influence and patronage, the bank plays a dominant role in Siena, known to countless tourists as the venue for the traditional Palio horse race. Monte Paschi, based in a magnificent palazzo, has an art collection that spans six centuries.
    The banking scandal has generated an explosive political controversy ahead of the February 24-25 election, with rival politicians trying to exploit the issue to undermine the centre left.
    ENDS
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